When a sale is refunded, what happens to the commission?

Before the payout, the two cancel out

If the customer is refunded before you pay the partner, the commission and its reversal cancel each other. Nothing is owed either way. This is the easy case, and the reason to wait before paying.

After the payout, it becomes a clawback

If you have already paid the partner, the reversal is now owed back to you. Asking a partner to send money back is awkward and slow. The simpler way is to take it off what they earn next, and to say so in your program terms.

If a partner earns nothing more, the amount stays owed. Decide in advance whether you would chase it, write it off, or leave it standing until they sell again.

A partial refund takes back its share

If a customer gets half their money back, take back half the commission. Reversing the whole commission for a small refund punishes the partner for something they did not cause. Taking back nothing pays them for money you no longer have.

Hold commissions for as long as refunds can happen

Set a holding period at least as long as the time in which a customer can still ask for a refund. If your store takes returns for 30 days, hold commissions for at least 30 days before they can be paid. A refund inside that window then cancels out before any money moves, and fewer clawbacks are needed.

Subscriptions: a refund and a cancellation are different

• A refunded invoice takes back the commission that invoice earned.
• A cancelled subscription earns nothing from its next renewal, and the renewals already paid stay paid.

Keep the original

When a commission comes back, record the reversal as a new line beside the original instead of editing it. The partner can see what happened and when, your totals still add up for any past date, and nobody has to trust a number that quietly changed.

Put it in your terms

Say how refunds, partial refunds and refunds after a payout are handled before the first partner joins. A partner who reads it first will not be surprised by it later.